Is greed really good? 7

In Tom Wolfe’s novel The Bonfire of the Vanities he outlines the greed and excess of Wall St in the 1980s. Financial players were making huge amounts of money and felt no responsibility for their actions. The movie Wall Street saw Michael Douglas immortalise the phrase ‘greed is good’!

The excess of the few has continued in more recent times, even as members of the public who are working for a reasonable wage are suffering under high prices, high interest rates, high fuel prices, and more.

US President Obama is angry that managers who ran the AIG insurance group so badly that it required government bailouts are now getting huge bonuses.

The South African Cabinet are no less angry of the payout, believed to be between R5m and R8m, paid to the SAA CEO who has agreed to leave the company. A company that required a R1,5billion injection from the government just to keep operating.

Des Squire raises the notion this week of business leaders being accountable for their action, and having some integrity. Are leaders really accountable if they take huge bonuses and retention payments even when the companies they are running are performing so badly? Why do these business leaders across the world think that they can get away with this, when most people have to work very hard just to make ends meet?

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7 thoughts on “Is greed really good?

  • Peter John Trollope

    Wow, huge controversial issue….. will always be, particularly when there are still such huge differences between the lowest and highest paid. I do believe that packages in general, should be heavily weighted towards the achievement of performance objectives and or defined period profitability. Note the and or – it is possible to be appointed and tasked with the achievement of longer term goals in an organization that might currently be in a loss or breakeven position. The exec would still need to be of the highest calibre and would need to be attracted to the task. I sometimes wonder if the business world has not created a short term focus, though, together with the other monsters this pressure creates? I do think a movement towards more principal centred leadership with longer term goals aligned to strong organizational objectives and values is a quietly growing trend. Unfortunately good does not get the same press as bad…. As far as the poorly paid masses are concerned, there are still mountains to be moved, and whilst there has been much good done by many individuals and corporate sponsors, I do not think that Corporate SA and some of the rich and famous have really contibuted they way they could.Need a real GOYA initiative (could speed up the potential revenues of the future..)

  • Dale Williams

    Bill Maher on his realtime show made the comment that US execs have finally got the message re bonuses, particularly with the AIG debacles.. They now realise that they need to seriously raise them to counter the 90% tax…

  • Claire Fowler

    A few things seem to be applicable here:

    1. Salaries for execs seem to be following the trend of being super inflated
    2. Companies are not screening their execs properly and are ending up hiring incompetent staff
    3. Which results in “the rich getting richer, and the poor getting poorer” within the workplace, no matter if they are worth the money they are being paid or not!

    In my opinion, certain companies do not reward their staff adequately, making it unattractive to work for them, while others over-inflate their staff members packages resulting in them having to make large settlements when things do not work out. This hardly seems fair and has opened the door for cunning individuals and ultimately disaster for the company.

  • Des Squire

    A 13th cheque or a year end bonus is the norm in industry and employees eagerly await their bonus whether deserved of not.

    This also applies to the annual wage review. Employees expect a cost of living increase irrespective of whether they have added value to the organisation or given excellent service over the preceding twelve months.

    Annual wage increases escalate salaries and company payroll on an annual basis. Is this right? Have we not created a financial nightmare for companies? Why is it seen to be the norm and why do companies state in letters of appointment that salaries will be reviewed on an annual basis. Should these increases not be based on input and merit?

    A large percentage of the annual increase goes to taxes anyway and invariably employees feel the increase was not worthwhile.

    Should employers not be issuing letters of appointment or contracts of employment that state “it is not the company policy to guarantee annual increases or a bonus each year? A bonus and/or salary increase will be considered based on performance and at the sole discretion of the company”
    The increase in unemployment has to some extent been caused by employees pricing themselves out of the market. The cause of this can partly be attributed to the annual salary review. An employee who commenced with a company in 1996 at a salary of say R5000 per month will now be earning in the region of R8250 if an annual increase of 5% had been granted. This amounts to an overall increase over the period of about 60%. Has the employee offered an additional 60% effort and productivity over the same period? Can the company carry this sort of escalation in overheads? The result – companies make less profit, are forced to downsize and to lay off staff.

    I am not saying companies should not be paying bonuses or giving salary increases. What I am saying is these should not become entrenched by means of a contract, letter of appointment or other similar agreement. Increases and annual bonus should be paid to those who deserve them, who add value to the organisation and have shown service excellence beyond what was expected.

    Where CEO’s and other executive performance bonuses are concerned these should only be paid on condition there has been an increase in overall company performance and profitability.

    Salaries are a reward for doing what is expected. Bonuses are paid for going the extra mile.

    Des Squire

  • Fanie Agenbach

    I think greed can be explained as similar to lust. Lust is wanting something so badly that one do not think of ethics and moral issues. You must have a certain thing at all costs. Regarding bonusses I’d say if a person is worthy of receiving extra remuneration for extra work done that benifitted the company in general then he/sehe deserve it but if there was no extra work done and the company did not do better due to that persons iputs, then no bonus should be paid. This is applicable on everyone and bonuses should be paid pro rata the imput and result thereof.
    Anyone that says “greed is good” is lusting for money. Lust/greed is immoral and should not be entertained at all. Work for what you earn. Be remunerated extra for extra work that brought positive results.

  • Johann Krüger

    There are many examples of legally correct but immoral activities. A recent article pointed out the dangers of signing surety, where a retired couple signed surety for a R150000 business loan for their son, which he paid off before the time and the surety was requested back but never released by the bank. The business was sold and the subsequent owners went into debt and insolvent with the bank falling back on this “surety” and effectively bankrupting this retired couple. If this is acceptable then we as society are far gone.

    To link up to the issue of bonusses – I always mantained that a 13th cheque is not a bonus but and extention of the remuneration. We should reward people with real bonusses, but should include clauses like morality and profit (at all cost) should not be the determining factor. The bonusses in question, if contractual can therefore not be called bonusses because the companies failed dismally.

    May be were are slowly getting onto the right track with considerations for the environment and other social issius also becoming important for the survival of companies. The survival of companies cannot be at the cost of humanity. How can we fight crime, if we have no collective and individual moral concience?

  • Alan Hammond Post author

    Hi Edson, I agree that if people deserve their bonus there isn’t (too much) of a problem. I would probably say well done to them. Its when the company completely tanks and they still want a bonus! Yes you can still be paid, but a bonus isn’t appropriate. Maybe it begs the question of what is a bonus. If you are guaranteed it in your employment contract maybe it shoudn’t be called a bonus? It doesn’t have to lead to communism, just a system where people are rewarded fairly.